Sunshine Baking Company is a diversified food products company with three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 2010, are as follows:

Bread Division

Snack Cake

Division

Retail Bakeries

Division Sales

8100000

8700000

7800000

Cost of Goods Sold

4980000

5400000

4600000

Operating expenses

1,662,000

1,995,000

1,484,000

Invested assets

10,800,000

10,875,000

6,000,000

The management of Sunshine Baking Company is evaluating each division as a basis for planning a future expansion of operations.

Instructions

1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges.

2. Using the DuPont formula for rate of return on investment, compute the profit margin, investment turnover, and rate of return on investment for each division.

3. If available funds permit the expansion of operations of only one division, which of the divisions would you recommend for expansion, based on parts (1) and (2)?Explain.